I discuss this particular scenario with my students a lot. Murdoch’s problem: declining newspaper sales and ad revenue. Murdoch’s solution: an iPad app! Real problem: people access their news in very different ways these days. Solution: Cater to that and produce something they want, when they want it. Read More →

Just briefly: the theory of the firm asks why we sometimes rely on contracts — I sign an agreement with your company to make my widget — and sometimes go for direct control: I employ people to make widgets. Hart (and others) argue that such things depend crucially on our inability to write complete contracts, specifying all details — and that the incompleteness of contracts can pose problems for investment decisions. For example, if you contract with other people to build equipment, they may be unwilling to invest in quality in the belief that you will use your sole-buyer status to extract the benefits.

And that, apparently, is exactly what has been going on with Microsoft; its reliance on other people to build computers using its software worked very well for a long time, but lately Apple’s control-freak approach has been winning out.

Lots more to say, and I’m still on vacation, but this article was great fodder for the kind of economic analysis that I would be doing more of if we weren’t in such dire straits.

Not too long ago I would never have said this: I love teaching. I’ve been leading a digital strategy class at the University of Oregon since late 2010 after being invited to do so by the indomitable Professor Deborah Morrison. She worked on me for quite some time. I capitulated. Last week Spring Term ended sending off 28 students of mine, who I now hope will spend quality time pondering advertising, apps, websites, user experience, digital products, mobile, designing for small screens and, most importantly, how the web and mobile are their own thing, in an entirely new light. Read More →